UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 1, 2026
PROSPERITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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Texas |
001-35388 |
74-2331986 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
4295 San Felipe
Houston, Texas 77027
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (281) 269-7199
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common stock, par value $1.00 per share |
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PB |
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New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
Effective July 1, 2026, Prosperity Bancshares, Inc. (“Prosperity”) completed its acquisition of Stellar Bancorp, Inc., a Texas corporation (“Stellar”), pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated as of January 27, 2026, by and between Prosperity and Stellar, as previously disclosed in Prosperity’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 1, 2026 (the “Original Form 8-K”). Pursuant to the Merger Agreement, Stellar merged with and into Prosperity (the “Merger”), with Prosperity continuing as the surviving corporation in the Merger.
This Current Report on Form 8-K/A (the “Amendment”) is being filed to amend and supplement the Original Form 8-K to include the financial statements of Stellar and the pro forma financial information required by Item 9.01 of Form 8-K.
The pro forma financial information included in this Amendment has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that Prosperity and Stellar would have achieved had the companies been combined during the period presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after completion of the Merger. Except as described above, this Amendment does not otherwise amend, modify or update the disclosures contained in the Original Form 8-K and should be read in conjunction with the Original Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The audited consolidated financial statements of Stellar as of December 31, 2025 and 2024, and for each of the fiscal years ended December 31, 2025, 2024 and 2023, and the related notes, are filed as Exhibit 99.1 hereto and incorporated herein by reference.
The unaudited condensed consolidated financial statements of Stellar as of March 31, 2026 and for the three months ended March 31, 2026 and 2025, and the related notes, are filed as Exhibit 99.2 hereto and incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma condensed combined balance sheet of Prosperity as of March 31, 2026, giving effect to the Merger as if it had occurred on March 31, 2026, and the unaudited pro forma condensed combined statements of income of Prosperity for the three months ended March 31, 2026 and for the fiscal year ended December 31, 2025, in each case giving effect to the Merger as if it had occurred on January 1, 2025, are filed as Exhibit 99.3 hereto and incorporated herein by reference.
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Exhibit Number |
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Description of Exhibit |
23.1 |
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Consent of Crowe LLP, independent registered public accounting firm (with respect to Stellar Bancorp, Inc.). |
99.1 |
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Audited consolidated financial statements of Stellar Bancorp, Inc. as of December 31, 2025 and 2024, and for each of the fiscal years ended December 31, 2025, 2024 and 2023, and the related notes (incorporated by reference to Part II, Item 8 of Stellar Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 26, 2026). |
99.2 |
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Unaudited condensed consolidated financial statements of Stellar Bancorp, Inc. as of March 31, 2026 and for the three months ended March 31, 2026 and 2025, and the related notes (incorporated by reference to Part I, Item 1 of Stellar Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 filed with the SEC on April 28, 2026). |
99.3 |
|
Unaudited pro forma condensed combined balance sheet of Prosperity Bancshares, Inc. as of March 31, 2026 and unaudited pro forma condensed combined statements of income of Prosperity Bancshares, Inc. for the three months ended March 31, 2026 and for the fiscal year ended December 31, 2025. |
104 |
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Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PROSPERITY BANCSHARES, INC. (Registrant) |
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Dated: August 31, 2026 |
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By: |
/s/ Charlotte M. Rasche |
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Name: Charlotte M. Rasche |
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Title: Executive Vice President and General Counsel |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and notes thereto have been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the Merger and related transaction accounting adjustments (pro forma adjustments) described in the accompanying notes.
On July 1, 2026, Prosperity Bancshares, Inc. (“Prosperity”) completed its previously announced acquisition of Stellar Bancorp, Inc., a Texas corporation (“Stellar”), pursuant to the Agreement and Plan of Merger, dated as of January 27, 2026 (the “Merger Agreement”), by and between Prosperity and Stellar.
Pursuant to the Merger Agreement, Stellar merged with and into Prosperity (the “Merger”), with Prosperity continuing as the surviving corporation in the Merger. Immediately following the Merger, Stellar Bank, a Texas banking association and wholly owned subsidiary of Stellar, merged with and into Prosperity Bank, a Texas banking association and wholly owned subsidiary of Prosperity (the “Bank Merger”), with Prosperity Bank continuing as the surviving bank in the Bank Merger.
Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.01 per share, of Stellar (“Stellar common stock”) outstanding immediately prior to the Effective Time, other than certain shares held by Prosperity or Stellar, was converted into the right to receive (i) 0.3803 shares of common stock (the “Per Share Stock Consideration”), par value $1.00 per share, of Prosperity (“Prosperity common stock”), (ii) an amount in cash equal to $11.36 (the “Per Share Cash Consideration”) and (iii) cash in lieu of fractional shares.
Prosperity has prepared the unaudited pro forma condensed combined statements of income appearing below to present on a pro forma basis the consolidated statements of income of Prosperity assuming that the merger with Stellar was consummated on January 1, 2025, and to provide information with respect to the pro forma consolidated results of operations that Prosperity would have had for the year ended December 31, 2025, and for the three months ended March 31, 2026. Prosperity has prepared the unaudited pro forma condensed combined balance sheet appearing below to present on a pro forma basis the consolidated financial position of Prosperity assuming that the merger with Stellar was consummated on March 31, 2026.
The unaudited pro forma condensed combined financial statements contain information derived from, and should be read together with:
•the accompanying notes to the unaudited pro forma condensed combined financial statements;
•Prosperity’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2025, included in Prosperity’s Annual Report on Form 10-K for the year ended December 31, 2025;
•Prosperity’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2026, included in Prosperity’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026;
•Stellar’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2025, included in Stellar’s Annual Report on Form 10-K for the year ended December 31, 2025, and
•Stellar’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2026, included in Stellar’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.
The Merger and the Bank Merger will be accounted for as an acquisition of Stellar and Stellar Bank by Prosperity and Prosperity Bank under the acquisition method of accounting in accordance with the Financial Accounting Standard Board’s Accounting Standard Codification Topic 805, Business Combinations (“ASC 805”). The unaudited pro forma condensed combined financial statements of Prosperity and the other pro forma combined financial information appearing below have been prepared using the acquisition method of accounting.
The unaudited pro forma condensed combined statements of income for the year ended December 31, 2025, and for the three months ended March 31, 2026, present the consolidated results of operations giving pro forma effect to the following as if they had occurred as of January 1, 2025:
•the full-year impact of Stellar’s statements of income, including pro forma amortization and accretion of purchase accounting adjustments on securities, loans and intangible assets; and
•the issuance of the aggregate Per Share Stock Consideration of 19.4 million shares of Prosperity common stock, and the payment of the aggregate Per Share Cash Consideration of $578.7 million.
The unaudited pro forma condensed combined balance sheet as of March 31, 2026 presents the consolidated financial position giving pro forma effect to the following as if they had occurred as of March 31, 2026:
•the completion of the Merger, including the issuance of 19.4 million shares of Prosperity common stock and the payment of $578.7 million; and
•$63.0 million in estimated direct transaction costs related to the Merger.
The preparation of the unaudited pro forma condensed combined financial statements and related adjustments required Prosperity’s management to make certain assumptions and estimates, which it believes are reasonable under the circumstances. Prosperity has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required fair market value estimates of the Stellar’s assets acquired or liabilities assumed, other than a preliminary estimate for intangible assets. Accordingly, apart from the aforementioned, certain Stellar assets and liabilities are presented at their respective carrying amounts and should be treated as preliminary values. Accordingly, the unaudited pro forma adjustments, including the allocations of the purchase price, are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Certain reclassifications have been made to the historical financial statements of Stellar to conform to the presentation in Prosperity’s financial statements. Accordingly, the unaudited pro forma condensed combined financial statements and other unaudited pro forma condensed combined financial information are presented for illustrative purposes only and are not necessarily indicative of the results that might have occurred had the Merger taken place on January 1, 2025, for statement of income purposes, and on March 31, 2026, for balance sheet purposes. Historical results for any prior period are not necessarily indicative of results to be expected in any future period, and historical results for the three months ended March 31, 2026, are not necessarily indicative of results to be expected for all of 2026. A final determination of the fair values of Stellar’s assets and liabilities will be based on the actual net tangible and intangible assets of Stellar that existed as of the date of completion of the Merger, which are subject to adjustments for up to one year after the Merger date. Consequently, amounts preliminarily allocated to goodwill and identifiable intangibles could change significantly from those allocations used in the unaudited pro forma condensed combined financial statements presented below and could result in a material change in amortization of acquired intangible assets.
In connection with the plan to integrate the operations of Prosperity and Stellar following the Effective Time, Prosperity anticipates that nonrecurring charges, such as costs associated with systems implementation, severance, and other costs related to exit or disposal activities, could be incurred. Prosperity is not yet able to fully determine the timing, nature and amount of these charges. However, these charges could affect the results of operations of the combined company in the period in which they are recorded. The unaudited pro forma condensed combined financial statements do not include the effects of the costs associated with any restructuring or integration activities resulting from the transaction or any anticipated disposition of assets that may result from such integration.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2026
(in thousands)
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Prosperity
(as reported) |
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Stellar
(as reported) |
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Reclassifications
Note 3 |
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Pro Forma
Adjustments |
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Note 5 |
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Pro Forma
Combined |
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Assets |
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Cash and due from banks |
$ |
1,547,967 |
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|
$ |
549,570 |
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|
$ |
— |
|
|
$ |
(641,697 |
) |
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(a) |
|
$ |
1,455,840 |
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Federal funds sold |
|
209 |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
209 |
|
Total cash and cash equivalents |
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1,548,176 |
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|
|
549,570 |
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|
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— |
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|
|
(641,697 |
) |
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|
1,456,049 |
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Available for sale securities, at fair value |
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356,134 |
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1,864,710 |
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— |
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2,220,844 |
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Held to maturity securities, at cost |
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11,595,457 |
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— |
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— |
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|
|
|
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11,595,457 |
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Total loans |
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25,287,986 |
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|
7,587,952 |
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|
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— |
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(28,480 |
) |
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(b) |
|
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32,847,458 |
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Less allowance for credit losses |
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(383,840 |
) |
|
|
(85,431 |
) |
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— |
|
|
|
(169 |
) |
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(c) |
|
|
(469,440 |
) |
Loans, net |
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24,904,146 |
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|
7,502,521 |
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— |
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(28,649 |
) |
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|
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|
32,378,018 |
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Bank premises and equipment, net |
|
429,775 |
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|
99,861 |
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|
(14,342 |
) |
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— |
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|
515,294 |
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Accrued interest receivable |
|
120,565 |
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|
36,589 |
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— |
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— |
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|
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157,154 |
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Goodwill |
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3,822,283 |
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|
497,318 |
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— |
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|
|
236,385 |
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(d) |
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|
4,555,986 |
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Core deposit intangibles |
|
111,243 |
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|
|
66,137 |
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— |
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93,453 |
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(e) |
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|
270,833 |
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Other real estate owned |
|
13,257 |
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9,454 |
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|
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— |
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|
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— |
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|
|
|
|
22,711 |
|
Bank owned life insurance (BOLI), net |
|
446,662 |
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|
|
110,103 |
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|
|
— |
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|
|
— |
|
|
|
|
|
556,765 |
|
Federal Home Loan Bank and Federal Reserve Bank stock |
|
107,477 |
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|
|
51,105 |
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|
|
— |
|
|
|
— |
|
|
|
|
|
158,582 |
|
Other assets |
|
164,008 |
|
|
|
101,988 |
|
|
|
14,342 |
|
|
|
24,444 |
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(f) |
|
|
304,782 |
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Total assets |
$ |
43,619,183 |
|
|
$ |
10,889,356 |
|
|
$ |
— |
|
|
$ |
(316,064 |
) |
|
|
|
$ |
54,192,475 |
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Liabilities and Shareholders' Equity |
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Deposits |
|
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|
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Noninterest-bearing |
$ |
10,580,920 |
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|
$ |
3,210,579 |
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|
$ |
— |
|
|
$ |
— |
|
|
|
|
$ |
13,791,499 |
|
Interest-bearing |
|
22,051,836 |
|
|
|
5,771,431 |
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|
|
— |
|
|
|
— |
|
|
|
|
|
27,823,267 |
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Total deposits |
|
32,632,756 |
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|
|
8,982,010 |
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|
|
— |
|
|
|
— |
|
|
|
|
|
41,614,766 |
|
Other borrowings |
|
2,200,000 |
|
|
|
135,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
2,335,000 |
|
Securities sold under repurchase agreements |
|
176,099 |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
176,099 |
|
Accrued interest payable |
|
30,165 |
|
|
|
5,240 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
35,405 |
|
Allowance for credit losses on off-balance sheet credit exposures |
|
37,646 |
|
|
|
15,441 |
|
|
|
— |
|
|
|
— |
|
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(c) |
|
|
53,087 |
|
Other liabilities |
|
258,480 |
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|
|
43,644 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
302,124 |
|
Subordinated notes and junior subordinated debentures |
|
76,186 |
|
|
|
40,256 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
116,442 |
|
Total liabilities |
|
35,411,332 |
|
|
|
9,221,591 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
44,632,923 |
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Prosperity equity |
|
8,207,851 |
|
|
|
|
|
|
— |
|
|
|
1,351,701 |
|
|
(g) |
|
|
9,559,552 |
|
Total Stellar equity |
|
|
|
|
1,667,765 |
|
|
|
— |
|
|
|
(1,667,765 |
) |
|
(g) |
|
|
— |
|
Total shareholders' equity |
|
8,207,851 |
|
|
|
1,667,765 |
|
|
|
— |
|
|
|
(316,064 |
) |
|
(g) |
|
|
9,559,552 |
|
Total liabilities and shareholders' equity |
$ |
43,619,183 |
|
|
$ |
10,889,356 |
|
|
$ |
— |
|
|
$ |
(316,064 |
) |
|
|
|
$ |
54,192,475 |
|
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THREE MONTHS ENDED MARCH 31, 2026
(in thousands, except per share data)
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
Prosperity
(as reported) |
|
|
Stellar
(as reported) |
|
|
Reclassifications
Note 3 |
|
|
Pro Forma
Adjustments |
|
|
Note 5 |
|
Pro Forma
Combined |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
$ |
361,756 |
|
|
$ |
119,783 |
|
|
$ |
— |
|
|
$ |
2,310 |
|
|
(h) |
|
$ |
483,849 |
|
Securities |
|
70,531 |
|
|
|
20,428 |
|
|
|
— |
|
|
|
3,648 |
|
|
(i) |
|
|
94,607 |
|
Federal funds sold and other earning assets |
|
9,488 |
|
|
|
4,884 |
|
|
|
— |
|
|
|
|
|
|
|
|
14,372 |
|
Total interest income |
|
441,775 |
|
|
|
145,095 |
|
|
|
— |
|
|
|
5,958 |
|
|
|
|
|
592,828 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
104,237 |
|
|
|
38,268 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
142,505 |
|
Other borrowings |
|
14,783 |
|
|
|
149 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
14,932 |
|
Securities sold under repurchase agreements |
|
902 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
902 |
|
Subordinated debentures |
|
703 |
|
|
|
747 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
1,450 |
|
Total interest expense |
|
120,625 |
|
|
|
39,164 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
159,789 |
|
Net interest income |
|
321,150 |
|
|
|
105,931 |
|
|
|
— |
|
|
|
5,958 |
|
|
|
|
|
433,039 |
|
Provision for credit losses |
|
— |
|
|
|
2,497 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
2,497 |
|
Net interest income after provision for credit losses |
|
321,150 |
|
|
|
103,434 |
|
|
|
— |
|
|
|
5,958 |
|
|
|
|
|
430,542 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonsufficient funds (NSF) fees |
|
10,867 |
|
|
|
— |
|
|
|
142 |
|
|
|
— |
|
|
|
|
|
11,009 |
|
Credit card, debit card and ATM card income |
|
9,483 |
|
|
|
547 |
|
|
|
774 |
|
|
|
— |
|
|
|
|
|
10,804 |
|
Service charges on deposit accounts |
|
8,680 |
|
|
|
1,635 |
|
|
|
(142 |
) |
|
|
— |
|
|
|
|
|
10,173 |
|
Trust income |
|
4,922 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
4,922 |
|
Mortgage income |
|
1,280 |
|
|
|
— |
|
|
|
56 |
|
|
|
— |
|
|
|
|
|
1,336 |
|
Brokerage income |
|
1,568 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
1,568 |
|
Net gain (loss) on sale or write-down of assets |
|
318 |
|
|
|
(37 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
281 |
|
Other |
|
9,356 |
|
|
|
2,965 |
|
|
|
(830 |
) |
|
|
— |
|
|
|
|
|
11,491 |
|
Total noninterest income |
|
46,474 |
|
|
|
5,110 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
51,584 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
109,211 |
|
|
|
43,931 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
153,142 |
|
Net occupancy and equipment |
|
10,654 |
|
|
|
4,575 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
15,229 |
|
Credit and debit card, data processing and software amortization |
|
18,114 |
|
|
|
6,073 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
24,187 |
|
Regulatory assessments and FDIC insurance |
|
6,041 |
|
|
|
1,639 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
7,680 |
|
Core deposit intangibles amortization |
|
5,259 |
|
|
|
4,886 |
|
|
|
— |
|
|
|
1,643 |
|
|
(j) |
|
|
11,788 |
|
Depreciation |
|
5,548 |
|
|
|
1,971 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
7,519 |
|
Communications |
|
3,834 |
|
|
|
759 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
4,593 |
|
Net other real estate expense |
|
300 |
|
|
|
— |
|
|
|
184 |
|
|
|
— |
|
|
|
|
|
484 |
|
Merger and acquisition expenses |
|
42,516 |
|
|
|
3,307 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
45,823 |
|
Other |
|
15,810 |
|
|
|
8,023 |
|
|
|
(184 |
) |
|
|
— |
|
|
|
|
|
23,649 |
|
Total noninterest expense |
|
217,287 |
|
|
|
75,164 |
|
|
|
— |
|
|
|
1,643 |
|
|
|
|
|
294,094 |
|
Income before income taxes |
|
150,337 |
|
|
|
33,380 |
|
|
|
— |
|
|
|
4,315 |
|
|
|
|
|
188,032 |
|
Provision for income taxes |
|
34,070 |
|
|
|
6,414 |
|
|
|
— |
|
|
|
906 |
|
|
(l) |
|
|
41,390 |
|
Net income |
$ |
116,267 |
|
|
$ |
26,966 |
|
|
$ |
— |
|
|
$ |
3,409 |
|
|
|
|
$ |
146,642 |
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
1.16 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
$ |
1.23 |
|
Weighted average shares outstanding |
|
99,825 |
|
|
|
50,829 |
|
|
|
|
|
|
(31,458 |
) |
|
(m) |
|
|
119,196 |
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
1.16 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
$ |
1.23 |
|
Weighted average shares outstanding |
|
99,825 |
|
|
|
50,944 |
|
|
|
|
|
|
(31,573 |
) |
|
(m) |
|
|
119,196 |
|
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2025
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prosperity
(as reported) |
|
|
Stellar
(as reported) |
|
|
Reclassifications
Note 3 |
|
|
Pro Forma
Adjustments |
|
|
Note 5 |
|
Pro Forma
Combined |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
$ |
1,295,474 |
|
|
$ |
484,877 |
|
|
$ |
— |
|
|
$ |
12,320 |
|
|
(h) |
|
$ |
1,792,671 |
|
Securities |
|
230,696 |
|
|
|
68,576 |
|
|
|
— |
|
|
|
14,593 |
|
|
(i) |
|
|
313,865 |
|
Federal funds sold and other earning assets |
|
44,153 |
|
|
|
21,017 |
|
|
|
— |
|
|
|
|
|
|
|
|
65,170 |
|
Total interest income |
|
1,570,323 |
|
|
|
574,470 |
|
|
|
— |
|
|
|
26,913 |
|
|
|
|
|
2,171,706 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
379,977 |
|
|
|
166,807 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
546,784 |
|
Other borrowings |
|
104,234 |
|
|
|
986 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
105,220 |
|
Securities sold under repurchase agreements |
|
4,620 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
4,620 |
|
Subordinated debentures |
|
— |
|
|
|
5,057 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
5,057 |
|
Total interest expense |
|
488,831 |
|
|
|
172,850 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
661,681 |
|
Net interest income |
|
1,081,492 |
|
|
|
401,620 |
|
|
|
— |
|
|
|
26,913 |
|
|
|
|
|
1,510,025 |
|
Provision for credit losses |
|
— |
|
|
|
10,158 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
10,158 |
|
Net interest income after provision for credit losses |
|
1,081,492 |
|
|
|
391,462 |
|
|
|
— |
|
|
|
26,913 |
|
|
|
|
|
1,499,867 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonsufficient funds (NSF) fees |
|
37,552 |
|
|
|
— |
|
|
|
663 |
|
|
|
— |
|
|
|
|
|
38,215 |
|
Credit card, debit card and ATM card income |
|
37,408 |
|
|
|
2,241 |
|
|
|
1,013 |
|
|
|
— |
|
|
|
|
|
40,662 |
|
Service charges on deposit accounts |
|
29,988 |
|
|
|
6,282 |
|
|
|
(663 |
) |
|
|
— |
|
|
|
|
|
35,607 |
|
Trust income |
|
14,648 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
14,648 |
|
Mortgage income |
|
3,859 |
|
|
|
— |
|
|
|
166 |
|
|
|
— |
|
|
|
|
|
4,025 |
|
Brokerage income |
|
5,385 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
5,385 |
|
Net gain (loss) on sale or write-down of assets |
|
1,217 |
|
|
|
(302 |
) |
|
|
3 |
|
|
|
— |
|
|
|
|
|
918 |
|
Net loss on sale or write-up of securities |
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
|
|
(3 |
) |
Other |
|
38,244 |
|
|
|
13,569 |
|
|
|
(1,179 |
) |
|
|
— |
|
|
|
|
|
50,634 |
|
Total noninterest income |
|
168,301 |
|
|
|
21,790 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
190,091 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
353,105 |
|
|
|
168,807 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
521,912 |
|
Net occupancy and equipment |
|
37,088 |
|
|
|
17,619 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
54,707 |
|
Credit and debit card, data processing and software amortization |
|
48,614 |
|
|
|
22,980 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
71,594 |
|
Regulatory assessments and FDIC insurance |
|
18,095 |
|
|
|
6,187 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
24,282 |
|
Core deposit intangibles amortization |
|
14,442 |
|
|
|
21,580 |
|
|
|
— |
|
|
|
7,484 |
|
|
(j) |
|
|
43,506 |
|
Depreciation |
|
19,674 |
|
|
|
8,058 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
27,732 |
|
Communications |
|
13,988 |
|
|
|
3,435 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
17,423 |
|
Net other real estate expense |
|
653 |
|
|
|
— |
|
|
|
1,034 |
|
|
|
— |
|
|
|
|
|
1,687 |
|
Merger and acquisition expenses |
|
330 |
|
|
|
— |
|
|
|
— |
|
|
|
6,000 |
|
|
(k) |
|
|
6,330 |
|
Other |
|
50,224 |
|
|
|
36,804 |
|
|
|
(1,034 |
) |
|
|
— |
|
|
|
|
|
85,994 |
|
Total noninterest expense |
|
556,213 |
|
|
|
285,470 |
|
|
|
— |
|
|
|
13,484 |
|
|
|
|
|
855,167 |
|
Income before income taxes |
|
693,580 |
|
|
|
127,782 |
|
|
|
— |
|
|
|
13,429 |
|
|
|
|
|
834,791 |
|
Provision for income taxes |
|
150,737 |
|
|
|
24,910 |
|
|
|
— |
|
|
|
2,820 |
|
|
(l) |
|
|
178,467 |
|
Net income |
$ |
542,843 |
|
|
$ |
102,872 |
|
|
$ |
— |
|
|
$ |
10,609 |
|
|
|
|
$ |
656,324 |
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
5.72 |
|
|
$ |
1.99 |
|
|
|
|
|
|
|
|
|
|
$ |
5.74 |
|
Weighted average shares outstanding |
|
94,917 |
|
|
|
51,756 |
|
|
|
|
|
|
(32,385 |
) |
|
(m) |
|
|
114,288 |
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
5.72 |
|
|
$ |
1.99 |
|
|
|
|
|
|
|
|
|
|
$ |
5.74 |
|
Weighted average shares outstanding |
|
94,917 |
|
|
|
51,808 |
|
|
|
|
|
|
(32,437 |
) |
|
(m) |
|
|
114,288 |
|
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Note 1. Basis of Pro Forma Presentation
The accompanying unaudited pro forma condensed combined financial statements and related notes were prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined statement of income for the three months ended March 31, 2026, and for the year ended December 31, 2025 combine the historical consolidated statements of income of Prosperity and Stellar giving effect to the Merger as if it had been completed on January 1, 2025. The unaudited pro forma condensed combined balance sheet as of March 31, 2026 combines the historical consolidated balance sheets of Prosperity and Stellar giving effect to the Merger as if it had been completed on March 31, 2026.
Prosperity’s and Stellar’s historical financial statements were prepared in accordance with U.S. GAAP and presented in U.S. dollars. As discussed in Note 3, certain reclassifications were made to align Prosperity’s and Stellar’s financial statement presentation. Prosperity has not identified all adjustments necessary to conform Stellar’s accounting policies to Prosperity’s accounting policies. Prosperity is in the process of performing a more detailed review of Stellar’s accounting policies. As a result of that review, differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined company’s financial information.
The accompanying unaudited pro forma condensed combined financial statements and related notes were prepared using the acquisition method of accounting under the provisions of ASC 805, with Prosperity considered the acquirer of Stellar. ASC 805 requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. For purposes of the unaudited pro forma condensed combined balance sheet, the Merger consideration has been allocated to the assets acquired and liabilities assumed of Stellar based upon management’s preliminary estimate of their fair values as of March 31, 2026. Prosperity has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair market value of the Stellar’s assets acquired or liabilities assumed, other than a preliminary estimate for intangible assets. Accordingly, apart from the aforementioned, certain Stellar assets and liabilities are presented at their respective carrying amounts and should be treated as preliminary values. Any differences between the fair value of the Merger consideration and the fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Accordingly, the purchase price allocation and related adjustments reflected in these unaudited pro forma condensed combined financial statements are preliminary and subject to revision based on a final determination of Stellar’s fair value. Actual adjustments may differ from the amounts reflected in the unaudited pro forma condensed combined financial information, and the differences may be material.
All dollar amounts presented within these Notes to Unaudited Pro Forma Condensed Combined Financial Statements are in thousands, except per share data. Share amounts are in thousands.
Note 2. Estimated Operational Cost Savings
Prosperity anticipates operational cost savings in connection with the acquisition of Stellar. Prosperity anticipates that these savings will occur through the combination of back office operations and elimination of duplicate general operations, administrative and salary and benefits expense. Estimated cost savings are not presented as part of the pro forma adjustments and there can be no assurance they will be achieved in the amount or manner currently contemplated.
Note 3. Reclassification Adjustments
During the preparation of the unaudited pro forma condensed combined financial information, Prosperity performed a preliminary analysis of Stellar’s financial information to identify differences in accounting policies and differences in balance sheet and income statement presentation as compared to the presentation of Stellar. At the time of preparing the unaudited pro forma condensed combined financial information, Prosperity had not identified all adjustments necessary to conform Stellar’s accounting policies to Prosperity’s accounting policies and had also not identified all reclassification adjustments necessary to conform Stellar’s financial statement presentation with that of Prosperity’s. The reclassification adjustments represent Prosperity’s best estimates based upon the
information currently available to Prosperity and could be materially different from the amounts set forth in the unaudited pro forma condensed combined financial information once more detailed information is available.
Note 4. Preliminary Purchase Price Allocation
The following table summarizes the preliminary purchase price allocation to the estimated fair value of assets and liabilities assumed in the Merger (in thousands, except per share data):
|
|
|
|
|
Prosperity shares issued in exchange for outstanding Stellar common stock (50,939 shares as of June 30, 2026) (1) |
|
|
19,371 |
|
Pro forma purchase price—Stock (2) |
|
$ |
1,414,701 |
|
|
|
|
|
Pro forma purchase price—Cash (1) |
|
$ |
578,697 |
|
Total pro forma purchase price |
|
$ |
1,993,398 |
|
(1)Under the terms of the Merger Agreement, holders of Stellar common stock, options and restricted stock awards received 0.3803 shares of Prosperity common stock and $11.36 cash for each share of Stellar common stock (or its equivalent), subject to certain conditions.
(2)Based upon Prosperity closing price of $73.03 on June 30, 2026.
The preliminary estimated Merger consideration as shown in the table above is allocated to the tangible and intangible assets acquired and liabilities assumed of Stellar based on their preliminary estimated fair values. As described above in Note 1, Prosperity has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair market value of the Stellar assets to be acquired or liabilities assumed, other than a preliminary estimate for intangible assets and available for sale securities. Accordingly, apart from the aforementioned, certain assets acquired and liabilities assumed are presented at their respective carrying amounts and should be treated as preliminary values. The fair value assessments are preliminary and are based upon available information and certain assumptions, which Prosperity believes are reasonable under the circumstances. Actual results may differ materially from the assumptions within the unaudited pro forma condensed combined financial statements.
The following table sets forth a preliminary allocation of the estimated Merger consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of Stellar using Stellar’s consolidated balance sheet as of March 31, 2026:
|
|
|
|
|
|
|
|
|
|
As of March 31, 2026 |
|
|
|
(in thousands) |
|
Preliminary fair value of estimated total Merger consideration |
|
|
|
$ |
1,993,398 |
|
Assets Acquired: |
|
|
|
|
|
Total cash and cash equivalents |
|
$ |
549,570 |
|
|
|
Available for sale securities, at fair value |
|
|
1,864,710 |
|
|
|
Loans, net |
|
|
7,473,872 |
|
|
|
Bank premises and equipment, net |
|
|
85,519 |
|
|
|
Accrued interest receivable |
|
|
36,589 |
|
|
|
Core deposit intangibles |
|
|
159,590 |
|
|
|
Other real estate owned |
|
|
9,454 |
|
|
|
Bank owned life insurance (BOLI), net |
|
|
110,103 |
|
|
|
Federal Home Loan Bank and Federal Reserve Bank stock |
|
|
51,105 |
|
|
|
Other assets |
|
|
140,774 |
|
|
|
Total Assets Acquired |
|
$ |
10,481,286 |
|
|
|
Liabilities Assumed: |
|
|
|
|
|
Deposits-noninterest bearing |
|
$ |
3,210,579 |
|
|
|
Deposits-interest bearing |
|
|
5,771,431 |
|
|
|
Other borrowings |
|
|
135,000 |
|
|
|
Accrued interest payable |
|
|
5,240 |
|
|
|
Allowance for unused commitments |
|
|
15,441 |
|
|
|
Other liabilities |
|
|
43,644 |
|
|
|
Subordinated debentures |
|
|
40,256 |
|
|
|
Total Liabilities Assumed |
|
$ |
9,221,591 |
|
|
|
Net Assets Acquired |
|
|
|
$ |
1,259,695 |
|
Preliminary proforma goodwill |
|
|
|
$ |
733,703 |
|
Note 5. Pro forma Adjustments and Assumptions
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current assumptions and valuations, which are subject to change.
Balance Sheet
(a)This adjustment represents the estimated cash consideration for Stellar and estimated direct transaction costs calculated as follows:
|
|
|
|
Total cash consideration ($11.36/share) |
$ |
578,697 |
|
Estimated cash paid for direct transaction costs |
|
63,000 |
|
Pro forma net adjustment to cash and due from bank |
$ |
641,697 |
|
(b)Adjustment to total loans to reflect preliminary estimated fair value adjustments on Stellar’s acquired loans.
(c)Adjustment to eliminate Stellar’s allowance for credit losses and establish Prosperity’s allowance for credit losses on loans.
|
|
|
|
Elimination of Stellar's allowance for credit losses on loans |
$ |
85,431 |
|
Establish Prosperity's allowance for credit losses on loans |
|
(85,600 |
) |
|
$ |
(169 |
) |
|
|
|
Elimination of Stellar's allowance for credit losses on off-balance sheet credit exposures |
$ |
(15,441 |
) |
Establish Prosperity's allowance for credit losses on off-balance sheet credit exposures |
|
15,441 |
|
|
$ |
— |
|
(d)Adjustment to goodwill based on the preliminary purchase price allocation as follows:
|
|
|
|
Fair value of Merger consideration in excess of the preliminary fair value of net assets acquired (from Note 4 above) |
$ |
733,703 |
|
Removal of Stellar historical goodwill |
|
(497,318 |
) |
Pro Forma net adjustment to goodwill |
$ |
236,385 |
|
(e)Adjustment to core deposit intangible (“CDI”) based on the preliminary purchase price allocation as follows:
|
|
|
|
Estimated CDI (2% of non-time deposits) |
$ |
159,590 |
|
Removal of Stellar historical CDI |
|
(66,137 |
) |
Net Adjustment to CDI |
$ |
93,453 |
|
(f)Deferred tax impact from fair value adjustments of $24,444.
(g)Adjustment to Prosperity and Stellar shareholders’ equity based upon the following:
|
|
|
|
Fair value of equity consideration issued to Stellar shareholders (from Note 4 above) |
$ |
1,414,701 |
|
Removal of Stellar historical equity |
|
(1,667,765 |
) |
Estimated cash paid for direct transaction costs |
|
(63,000 |
) |
Pro forma net adjustment to shareholders' equity |
$ |
(316,064 |
) |
Income Statement
(h)Adjustment to interest income on loans for estimated fair value mark on loans amortized over 4 years using the sum of years digits method.
(i)Adjustment to interest income on securities for elimination of Stellar’s net unrealized loss amortized over 5 years using the level yield method.
(j)Estimated core deposit intangible asset amortization at 2.0% of the acquired non-time deposits based upon 10-year life using the sum of years digits amortization method, net of Stellar historical CDI.
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2026 |
|
|
Year ended
December 31, 2025 |
|
Estimated CDI (2% of non-time deposits) amortized over 10 years (sum of years digits) |
$ |
6,529 |
|
|
$ |
29,064 |
|
Stellar's historical CDI Expense |
|
(4,886 |
) |
|
|
(21,580 |
) |
Estimated net CDI impact |
$ |
1,643 |
|
|
$ |
7,484 |
|
(k)Adjustment to reflect the preliminary estimated one-time merger related expenses, including legal fees and compensation expense.
(l)Adjustment to reflect the net federal income tax effect of the pro forma statement of income adjustments using Prosperity statutory tax rate of 21.0%.
(m)Adjustment to weighted-average shares of Prosperity common stock outstanding to eliminate weighted average shares of Stellar common stock outstanding and to reflect the estimated number of shares issued of Prosperity common stock to holders of Stellar common stock.
|
|
|
|
|
|
|
|
|
As of
March 31, 2026 |
|
|
As of
December 31, 2025 |
|
Adjustments to weighted average number of common shares outstanding—Basic |
|
|
|
|
|
To reflect acquisition of Stellar basic common shares |
|
(50,829 |
) |
|
|
(51,756 |
) |
To reflect shares of Prosperity common stock issued in the Merger |
|
19,371 |
|
|
|
19,371 |
|
|
|
(31,458 |
) |
|
|
(32,385 |
) |
|
|
|
|
|
|
Adjustments to weighted average number of common shares outstanding—Diluted |
|
|
|
|
|
To reflect acquisition of Stellar diluted common shares |
|
(50,944 |
) |
|
|
(51,808 |
) |
To reflect shares of Prosperity common stock issued in the Merger |
|
19,371 |
|
|
|
19,371 |
|
|
|
(31,573 |
) |
|
|
(32,437 |
) |
